Cash Reserve: CBN debits 10 banks N7.O2trn over failure to meet requirements
The Central Bank of Nigeria (CBN) in 2021 debited 10 banks N7.02 trillion over failure to meet the 27.5 per cent Cash Reserve Requirement (CRR) threshold.
According to audited financial statements of these banks, the apex bank had debited them a sum of N6.71trillion in 2020 for not meeting its monetary requirement.
The CRR is the minimum amount banks and merchant banks are expected to retain with the CBN from customer deposits and it carries no interest and is not available for use by the banks in their day-to-day operations.
In early 2020, the apex bank’s Monetary Policy Committee (MPC) increased CRR by five per cent from 22.5 per cent to 27.5 per cent over its intention to address monetary-induced inflation whilst retaining its 65 per cent Loan Deposit Ratio (LDR) policy.
The CBN by regulation forces banks to retain up to 27.5 per cent of their deposits in CRR requirement, meaning that the deposits are not accessed by the banks for loans and advances.
The policy, which started in 2019 has drawn criticisms from most of the banks and shareholders who have cited a drop in their profit as a major consequence.
The banks include: Access Bank Plc, Guaranty Trust Bank (GTBank), United Bank for Africa (UBA) Plc, FCMB group and Sterling Bank Plc.
The others are; Union Bank of Nigeria Plc, Stanbic IBTC Holdings Plc, Fidelity Bank Plc, and Zenith Bank Plc.
Extracts from 2021 audited accounts revealed that, Access Bank, followed by Zenith bank suffered the highest debits in 2021, among other 10 banks, while Sterling bank suffered the lowest debit.
Access bank and Zenith bank are the top two banks in terms of customer deposits.
Access Bank reported 12 per cent increase in restricted deposits with CBN in 2021 to N1.47trillion from N1.31trillion reported in 2020, while Zenith Bank reported a decline of 6.05 per cent to N1.25trillion CRR deposit with CBN as against N1.33trillion in 2020.
GTBank, the banking subsidiary of Guaranty Trust Holding company reported N953 billion CRR debit with CBN, a decline of 5.5 per cent from N1.01trillion reported in 2020.
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